Sprint Expects Better-Than-Expected RevenueSprint Expects Better-Than-Expected Revenue

Sprint says its annual revenue will be better than previously forecast thanks to an influx of large, new corporate and wholesale accounts it has won from those who have ditched distressed carriers such as WorldCom. Sprint executives say more than 50 new corporate and wholesale customers have signed up with the company's business unit this quarter.

"Sprint is picking up a significant amount of business," says Meta Group senior research analyst Don Carros. "Sprint is meeting with a lot of CIOs that are looking desperately for a way out of their contracts with WorldCom right now."

Thanks to the new business and cost-cutting for capital expenses (from $2.5 billion last fiscal year to $2.4 billion this year), Sprint says its FON division will post earnings per share of $1.41 to $1.43 for the year, before one-time charges, up from the previously estimated $1.40. Sprint is scheduled to release financial results for its third quarter of 2002, which ends Sept. 30, on Oct. 17.

Those gains have been offset slightly by an expected slight dip in the number of PCS mobile-phone subscribers this quarter. Sprint has been deactivating significantly more nonpaying and delinquent customers in the quarter than in the past. The deactivations in Sprint's Clear Pay calling plan will result in a temporary increase in customer churn, to 3%, in the quarter, Sprint says, up from 2.9% in the previous quarter.

The Clear Pay plan, introduced last year, proved popular from its inception but in the first several months of 2002 attracted significant numbers of customers who ended up not paying or submitting fraudulent payments, and it's those customers that have been deactivated, according to Sprint. "That's exactly what they should be doing," says Meta Group's Carros. In today's environment, "All the carriers are doing everything they can to keep receivables as current as possible," he says.

The guidance came one day after Sprint, the No. 3 U.S. long-distance telephone company, said it has agreed to sell its phone-directory business to R.H. Donnelley Corp. for $2.23 billion. The deal, which will yield after-tax cash proceeds of more than $2 billion, will help Sprint pay down its debt load, which stood at more than $20 billion at the end of the second quarter.